Crowdfunding has become a new alternative for entrepreneurs, small organizations, businesses and artists who are seeking funding. In its simplest form, crowdfunding is a means of rallying fans and supporters to raise money for creative projects, new ventures and more.

There are two main types of crowdfunding. The first model, donation-based funding, enables individuals to donate via a collaborative goal based process in return for products, perks or rewards.  The second and more recent model is investment crowdfunding, where businesses seeking capital sell ownership stakes in the form of equity or debt. In this model, funders become owners or shareholders and have a potential for financial return, unlike in the donation model.

Online crowdfunding started about five years ago and is growing across the globe with new platforms catering to different needs and interests.  Current philanthropic trends indicate remarkable growth in online donations and a strong desire for transparency; donors want to see where their gifts go.  According to two new studies by The Chronicle of Philanthropy, online donations to nonprofits of all sizes grew by 14 percent last year, compared to the 1.5 percent rise in giving across all platforms.

Crowdfunding websites such as IndieGoGo and KickStarter connect potential investors with project creators and developers, taking novel ideas and putting them into production. The advantage of the new online crowdfunding websites is that they provide a cost-effective way for independent artists and small organizations to reach many more people.  Many fans, friends and acquaintances may be able to give only small amounts, but with the ability to attract a big enough crowd to donate, funding goals have a better chance of being reached.

Crowdfunding websites offer a simple way to create attractive online fundraising pages that can be publicized through email lists, Facebook pages, blogs or any other social networks. Using available crowdfunding services, project creators essentially build web pages that host information, photos and promotional videos on products, projects or services they’re looking to get funded.  Crowdfunding campaigns have a time limit on these sites; typically giving periods are between 30 and 90 days.  The sizes and types of these projects are across the board; genres range from film, theatre, music, publishing to small business creation and just about any creative idea imaginable in between. Because of this innovative social market and the ease of donation, many creative projects are becoming reality.

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